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WASHINGTON (CNN) -- Ruling in an important property rights dispute, a divided U.S. Supreme Court limited the reach of federal regulators to block private development that might affect water quality.

The court concluded 5-4 on Monday that the Army Corps of Engineers exercised undue regulation in cases involving plans by two Michigan landowners to build a shopping center and condominiums on land that contained wetlands.

But the justices failed to agree on the broader issue of whether the government's reach extends to tributaries -- the lakes, streams, swamps, dikes, canals and even temporary ponds and drainage ditches that often cross state lines and feed a maze of larger so-called "navigable" waterways.

That division left courts, the government and developers with no clear guide over when wetlands would be subject to regulation.

Chief Justice John Roberts lamented the lack of consensus among his colleagues to interpret the scope of the Clean Water Act of 1972.

"Lower courts and regulated entities will now have to feel their way on a case-by-case basis," Roberts wrote.

100 million acres at stake

An estimated 100 million acres of wetlands in the lower 48 states are at the center of the debate, which pits the federal government and environmental groups against developers and business leaders. Many states and cities are split on the issue.

Justice Antonin Scalia, writing for the majority, said development should be permitted except when there is a direct connection to a larger protected waterway. He criticized the dissenting justices for ignoring the exact language of the law.

"The dissent's exclusive focus on ecological factors, combined with its total deference to the corps' ecological judgments, would permit the corps to regulate the entire country as 'waters of the United States,' " Scalia wrote.

Scalia was joined by Roberts and Justices Clarence Thomas and Samuel Alito. The cases were the first Alito participated in after he joined the high court in January.

Justice Anthony Kennedy agreed that in these particular cases the corps may have overstepped its bounds, but disagreed pointedly with his fellow conservatives that only "permanent bodies of waters" are subject to regulation.

Kennedy, a California native, has long been involved in appeals involving Western water rights. He broke with Scalia on an important point, believing even remote tributaries that have a "significant nexus" to a navigable waterway can be protected.

In a highly unusual move, Kennedy read a portion of his concurring ruling from the bench.

Focus on federal authority

The bitter dispute centered on where federal authority begins and ends.

John Rapanos has wanted to build a shopping center on his property since 1988, filling in three wetlands over the years, despite orders from the government to stop. He argued the nearest navigable waterway is 20 miles away, but regulators countered there was a "hydrological connection" between the wetlands and the Kawkawlin River.

The second case involves Keith and June Carabell, who applied for permits for a condo complex on their 19-acre parcel near Detroit. A ditch along the property drains into Lake St. Clair a mile away, the navigable waterway in this case.

After a state judge permitted the construction (with an on-site wetland enhancement), the Army Corps of Engineers stepped in and objected. Federal courts have sided with the government in both cases.

The high court's rulings do not mean immediate victory for Rapanos and the Carabells. Lower courts now will have to go back and decide whether the waterways on their property are subject to regulation, guided by the more restrictive interpretation of the justices.

In dissent, Justice John Paul Stevens said the government has a long-established authority to protect the environment. "The importance of wetlands for water quality is hard to overstate," Stevens wrote.

Stevens was backed by Justices David Souter, Ruth Bader Ginsburg and Stephen Breyer.

Stevens also read his dissent from the bench, something that happens occasionally and usually in only the most contentious cases.